Defence Stocks Fall Up to 3% as Valuation Worries Rise; BDL Downgraded, Nifty Defence Slips

Bharat Dynamics, GRSE, HAL, Cochin Shipyard, and other defence stocks decline amid easing global tensions, stretched valuations, and brokerage caution

Mumbai, July 10, 2025 — Defence sector stocks declined up to 3% on Wednesday, dragging the Nifty India Defence index lower by nearly 1.4% to 8,739, as investors reacted to valuation concerns, easing geopolitical triggers, and a brokerage downgrade on Bharat Dynamics (BDL).

This weakness follows a strong multi-month rally driven by India’s defence production push, large export orders, and conflict-driven sentiment globally. However, the current correction reflects a mix of profit booking, overbought signals, and cautious analyst commentary.

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Motilal Oswal Tags BDL as ‘Neutral’, Cites Fair Valuations

BDL (NSE: BDL) was the top loser on the index, falling over 3% to ₹1,917, after Motilal Oswal Financial Services initiated coverage with a ‘Neutral’ rating and a target price of ₹1,900, implying a downside of over 4% from its previous close of ₹1,985.

“We like BDL’s scalable model and strong order pipeline, but valuations remain full. We recommend waiting for better entry points,” the brokerage said.

Despite strong YTD gains of 69%, analysts believe much of the near-term optimism is priced in, with no fresh near-term triggers on the order book front.

Broader Sector Sees Red – GRSE, HAL, Solar Industries Slide

• GRSE (Garden Reach Shipbuilders) tumbled 3% to ₹2,890, extending its 11% monthly loss, though it remains up 96% over six months.

• Data Patterns and Zen Technologies slipped over 2% each.

• HAL, Solar Industries, and Cochin Shipyard fell between 1.8–2.3%.

• Mazagon Dock, Paras Defence, and BEL saw modest declines under 1%.

• BEML was down marginally.

Triggers Behind the Fall – Valuations, Geopolitics, and Profit-Taking

Three main catalysts have contributed to the slide:

Easing Geopolitical Risk:

• Ceasefire talks between Israel and Hamas, supported by US President Donald Trump, and receding tensions between Iran and Israel have reduced the urgency for global defence escalation.

Valuation Stretch:

• Stocks like HAL and Mazagon Dock have seen massive re-rating in the past year, with analysts flagging limited upside without incremental order announcements.

Profit Booking:

• Investors are locking in gains after a stellar YTD rally:

1. BDL: +69%
2. GRSE: +75%
3. HAL: +19%
4. Mazagon Dock: +46%

Watch for Orders, Budget Boost, or Export Deals

While the correction may continue in the short term, sector fundamentals remain intact due to:

• India’s increasing defence capex push,

• Focus on private sector defence production, and

• Strong export order visibility post-Operation Sindoor.

Traders should track any new order inflows, the upcoming Parliament session defence budget, and HAL’s updates on Tejas exports or strategic tie-ups. A technical bounce is also possible if the Defence Index finds support near the 8,600–8,700 zone.

Check This:

• Bharat Dynamics Stock Price

• Garden Reach Shipbuilders & Engineers Stock Price

• Mazagon Dock Stock Price